• Large markets with relatively affordable homes and good job opportunities – markets in the “sweet spot” between affordability and opportunity – include Dallas, Houston and Atlanta.
• “Sour” markets – those with both expensive housing and a lack of good jobs – include Atlantic City and Santa Fe.

It’s one of the great ironies of the U.S. economy: In markets where jobs are well-paying and plentiful, housing is very expensive; and in markets where housing is generally more affordable, job opportunities are scarce and wages are stagnant or even falling.

At least, that’s the common story.

But as it turns out, there are places that fit in a sweet spot, a kind of “Goldilocks zone” where job opportunities and wage growth coexist with relatively affordable homes.

Zillow plotted the price-to-income ratio[1] against employment growth and wage growth in 287 metro areas nationwide (figure 1). Of these metros, 176 (about 61 percent) fit the traditional conundrum: They either have plentiful employment and expensive housing; or cheap housing and scarce employment (the upper right and lower left quadrants of figure 1, respectively).

Of the remaining metros, 52 fall in the sweet spot (upper left quadrant of figure 1). These are places with both affordable housing and strong job markets. At the other end, 47 metros fall in the “sour spots”: Places with both expensive housing and weak employment growth.

In the chart below, the size of the dots represents the total size of employment in the metro area to give greater weight to the country’s large metro areas, and the color of the dots shows the average income growth in the metro area. Green dots represent metro areas that have experienced income growth – with darker green corresponding to stronger income growth – while tan dots have essentially had flat incomes and red dots have experienced a decline in average incomes.

In general, Texas markets seem particularly sweet right now, with Houston and Dallas representing two of the largest green dots in the sweet spot quadrant. Some of this may change going forward as the oil and gas industry – which has generated substantial employment and incomes gains in Texas in recent years – begins to contract in response to historically low oil prices. Other strong performers include Grand Rapids, Michigan; Fort Wayne, Indiana; and Atlanta. Jacksonville, Florida; Nashville, Tennessee; Raleigh, North Carolina; Austin, Texas; and Orlando, Florida also look fairly sweet, despite home values that lie just above the median price-to-income ratio of all markets analyzed.

Traditionally very expensive California metros (and Honolulu) cluster on the far right of the graph, featuring both strong employment growth (and in some cases, income growth) but also high price-to-income rates.